The Bank of England on Thursday decided to keep its key rate unchanged, as the market was cautious with the FTSE 100 closing the session 1.14% lower. Policymakers maintained the bank rate at 4.75% in light of persistent inflation in the UK. The BoE cautions that the headline inflation rate is expected to rise further in the near term while expressing significant uncertainty regarding developments in the labor market.
Global risks, particularly those stemming from geopolitical tensions, and potential trade wars were also highlighted, alongside the incoming US administration's plan to increase tariffs. Such measures could potentially impact future global trade and have both direct and indirect effects on the UK economy.
In a note, Danske Bank commented, 'The BoE delivered a dovish vote split but continues to emphasise a gradual approach to reducing the restrictiveness of monetary policy. We think this supports our base case of the next cut coming in February and a quarterly pace thereafter.' In related news, the US Federal Reserve reduced its rates from 4.75% to 4.5%, aligning with market expectations.
Additionally, Unilever ($ULVR) is making strides with its planned divestiture of specific brands. Following its agreement to sell Conimex, the consumer giant confirmed the sale of Unox and Zwan to Zwanenberg Food Group. As a consequence, shares dropped by 0.59%..